Idea Cellular misses analysts’ call, Q3 net down

The Aditya Birla Group’s Idea Cellular, the country’s third-largest mobile operator by subscribers and revenues, on Thursday missed estimates by posting a consolidated net profit of R764 crore during the October-December period, which was down 5.6% compared with the preceding quarter, reports fe Bureau in Mumbai.

Idea revised its capex guidance for FY16 to Rs 7,500 crore (excluding any spectrum-related payment) on account of its 4G roll-out. (Reuters)

The Aditya Birla Group’s Idea Cellular, the country’s third-largest mobile operator by subscribers and revenues, on Thursday missed estimates by posting a consolidated net profit of R764 crore during the October-December period, which was down 5.6% compared with the preceding quarter, reports fe Bureau in Mumbai. Total revenue at Rs 9,009 crore was up 3.71% sequentially.

While the company’s volumes during the period were better than expected with voice minutes rising to 199.2 billion minutes from 189.5 billion units in previous quarter, certain operational metrics disappointed and did not match expectations.

The company’s finance cost jumped 19.4% sequentially to Rs 365.7 crore during the quarter as net debt increased 70.3% to Rs 37,688.7 crore in same period. The company said that depreciation cost and interest cost increased due to additional charges related to fresh spectrum acquisition.

Idea revised its capex guidance for FY16 to Rs 7,500 crore (excluding any spectrum-related payment) on account of its 4G roll-out.

On the operating metrics front, average revenue per user during the quarter increased to Rs 176 from Rs 175 and average minutes of usage (MOU) increased to 393 from 386 on a sequential basis. However, average realisation per minute declined to 44.80 paise from 45.30 paise sequentially. Voice ARPM declined to 31.80 paise from 32.70 paise on a quarter-on-quarter basis.

Attributing the shrinking margins in both voice and data segments to higher interconnect usage charges (ICU) and lowering of ceiling tariffs for SMS and roaming services, Himanshu Kapania, managing director of Idea Cellular, said, “In addition to those factors we also did not pass the additional cost of taxes like Swachh Bharat cess to our customers; it too has impacted the margins. The company’s net mobile data customer base has remained flat at 41.4 million which was 41.3 million in the previous quarter.”

The company said that over the last one year its 3G data subscriber base increased by 8.2 million to 21.2 million and of its 172 million subscriber base around 55.5 million users have upgraded their phones to 3G/4G smartphone/devices.

The company maintained that profits could decline further in the coming quarters due to higher cost of amortisation on account of increasing capital expenditure. “We spent Rs 3,310 crore to acquire additional spectrum from Videocon Group for UP (West) and Gujarat circles and have spent more than Rs 6,500 crores in capital expenditure last year. We have lined up additional investment of Rs 7,500 crore for the current financial year and this may impact the profit margins further in the coming quarters,” Kapania added.